Defense contractors, workers to pay the price of peace President's planned cut of arms programs comes as a surprise to the defense industry.

New York TimesTHE BALTIMORE EVENING SUN

LOS ANGELES -- Even after six years of gradual Pentagon cuts, the Bush administration's plan to slash military spending by canceling or scaling back a number of high-profile arms programs came as a jolt to weapons builders and to thousands of workers from Connecticut to California who are likely to lose pTC their jobs in coming years.

Virtually every military contractor faces the loss of some business. The ensuing job losses would affect communities across the country, especially as business cutbacks spread to subcontractors and suppliers.

The administration plan, laid out by President Bush in the State of the Union Message on Tuesday night and in budget documents submitted to Congress yesterday, calls for an end to the Northrop Corp.'s B-2 Stealth bomber, built in California, and to the General Dynamics Corp.'s Seawolf submarine, assembled at the Electric Boat shipyard in Groton, Conn.

The plan also calls for other programs to be scaled back substantially, including the Comanche helicopter being designed for the Army, largely in Connecticut, by United Technologies Corp. and Boeing; the advanced cruise missile, built by McDonnell Douglas and General Dynamics, and a program for General Dynamics to upgrade the M-1 tank.

The administration's proposal calls for the Pentagon's budget for the next fiscal year to be cut by $10 billion from the current $291 billion. Many members of Congress had called for similar cuts in the wake of the Soviet Union's dissolution, but the president's proposal represents a sharp shift for the administration, which until recently had resisted canceling or delaying advanced weapons programs.

The plan, if enacted by Congress, would greatly accelerate the industry's shrinkage and hasten its reorientation toward technological research rather than mass production of weapons.

"If you make helicopters, aircraft, missiles, ships, look out, because you're going to get a lot smaller a lot faster than you think," said Gordon Adams, the director of the Defense Budget Project, a nonpartisan research group in Washington.

"It will be a substantially smaller industry . . . ," Mr. Adams said. "It's an industry without a lot of production workers and with a heavy emphasis on research and design teams."

Analysts said that by the time Congress finished its work on the budget, the cuts could go even deeper. But they said Congress faced a painful choice between reaping the peace dividend and preserving military contracting jobs in members' home districts during an election year and a recession.

"Bush just established a new ceiling that was lower than the prior ceiling, and it doesn't leave a lot of headroom for the industry," said Howard A. Rubel, an analyst at C.J. Lawrence. "There's going to be a lot of arm twisting and favor paying in Congress before this thing is played out."